{"id":43927,"date":"2017-09-22T06:59:10","date_gmt":"2017-09-22T06:59:10","guid":{"rendered":"https:\/\/www.biphoo.com\/bipnews\/?p=43927"},"modified":"2017-09-22T07:07:54","modified_gmt":"2017-09-22T07:07:54","slug":"nvidia-investors-should-ignore-the-noise-about-a-tesla-amd-partnership","status":"publish","type":"post","link":"https:\/\/www.biphoo.com\/bipnews\/business\/nvidia-investors-should-ignore-the-noise-about-a-tesla-amd-partnership.html","title":{"rendered":"Nvidia investors should ignore the noise about a Tesla-AMD partnership"},"content":{"rendered":"

Nvidia investors should ignore the noise about a Tesla-AMD partnership<\/span><\/strong><\/span><\/h2>\n

Nvidia investors should ignore the noise about a Tesla-AMD partnership: Shares of Nvidia Corp. sank in active trade Thursday, amid worries that Tesla Inc. was now working with Advanced Micro Devices Inc. on self-driving cars, but some analysts suggested those reports were much ado about nothing.<\/span><\/p>\n

RBC Capital analyst Mitch Steves said investors should \u201cignore the noise\u201d from the reports, as he believes even if they were confirmed, Nvidia\u2019s chips would likely remain the \u201cengine\u201d behind the artificial intelligence workloads, while AMD chips would just be developed for specific computing jobs.<\/span><\/p>\n

Analyst Craig Ellis at B. Riley said the report is more of a \u201cpsychological\u201d headline negative, not exactly a meaningful fundamental risk to expectations of Nvidia\u2019s automotive sales estimates.<\/span><\/p>\n

CNBC reported late Wednesday, citing a source familiar with the matter, that Tesla was working with AMD to develop its own AI chip for self-driving cars. The report said more than 50 people were working with former AMD employee Jim Keller, the head of Tesla\u2019s Autopilot advanced driver-assistance system, who has brought on several AMD employees to work on the project.<\/span><\/p>\n

Nvidia\u2019s stock NVDA, -2.73% sank as much as 4.4% in intraday trade, before bouncing slightly to close down 2.7%. Volume reached 22.6 million shares, compared with the full-day average of about 17 million shares.<\/span><\/p>\n

The stock closed at a record $187.55 as recently as Monday.<\/span><\/p>\n

Meanwhile, AMD\u2019s stock AMD, -2.40% rose as much as 3.6% intraday, but reversed course to decline 2.4%. Tesla shares TSLA, -1.99% fell 2.0%, erasing earlier gains of as much as 0.8%.<\/span><\/p>\n

B. Riley\u2019s Ellis said Nvidia was insulated from any revenue creep by AMD into autopilot systems, given that Nvidia has also announced partnerships with many other car makers, including Toyota Motor Corp. TM, -0.27% Volkswagen A.G.\u2019s VLKAY, +0.68% Audi group and Mercedes-Benz.<\/span><\/p>\n

Basically, Nvidia remains the \u201cdominant autopilot solutions provider with a substantial competitive moat and very strong developer momentum,\u201d Ellis wrote.<\/span><\/p>\n

He maintained his buy rating and stock price target of $200, which is 11% above current levels.<\/span><\/p>\n

RBC\u2019s Steves said while a Tesla-AMD partnership would make sense, he doesn\u2019t believe it would lead to a single-source dynamic, in which Tesla works only with AMD. \u201cInstead, we view this announcement as similar to dynamics we anticipate to occur in the data center: AMD winning some share while [Nvidia] remains as the de facto standard and market share leader,\u201d Steves wrote in a note to clients.<\/span><\/p>\n

In fact, \u201ccompetition\u201d from AMD could eventually be a good thing for Nvidia.<\/span><\/p>\n

\u201cThe key takeaway in our view is that the value of AI chips is continuing to increase, which is causing companies to look in some instances to a dual source,\u201d Steves wrote. \u201cWe continue to believe Nvidia will be the market share leader.\u201d<\/span><\/p>\n

He reiterated his outperform rating and $205 price target.<\/span><\/p>\n

Nvidia\u2019s stock has rallied 13.4% over the past three months, while AMD shares have lost 4.1%. In comparison, the PHLX Semiconductor Index SOX, -0.41% has climbed 5.2% and the S&P 500 index SPX, -0.30% has gained 2.7%.<\/span><\/p>\n

Source:\u00a0http:\/\/www.marketwatch.com\/story\/nvidia-investors-should-ignore-the-noise-about-a-tesla-amd-partnership-2017-09-21<\/span><\/p>\n

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